It's not you, it's me. Can we still be friends?

I have never been a fan of writing.  I have never been very gifted in getting my point across by using the written word.  However, I have always been interested in taking on challenges and not giving up until I succeed at whatever the challenge is.  While I'm not sure how to gauge whether or not I've "succeeded" at writing this blog, I can say it's been an immense blessing and a real source of encouragement by hearing from many of you through this process.

However, I face a challenge.  I work in a highly regulated industry, one that is monitored very closely.  My company has recently updated its Social Media policy, and while what I'm writing in this blog is a gray area for them, we both decided it's best if I discontinue writing at this time.  Perhaps things will change in the future, and I'll be able to take up writing again, but until such time, I'm going off the air, errrr, web.  

My final thoughts for this blog are this:

Matthew 6:24  (Matthew 6)

“No one can serve two masters, for either he will hate the one and love the other, or he will be devoted to the one and despise the other. You cannot serve God and money.

Luke 16:10  (Luke 16)

“One who is faithful in a very little is also faithful in much, and one who is dishonest in a very little is also dishonest in much.

Malachi 3:10  (Malachi 3)

"Bring the full tithe into the storehouse, that there may be food in my house. And thereby put me to the test, says the Lord of hosts, if I will not open the windows of heaven for you and pour down for you a blessing until there is no more need."

We are called to be good stewards of our money, but we are not to be slaves to it.  Be wise with what has been given to you and give generously back not only to those around you, but also to the Creator who gave you such things.

Thanks for reading along the way. I'd love to hear from any of you who decided to take the many challenges I posed.  This doesn't mean you can't ask me questions anytime.  I'd love to help find answers.  Take care and God bless!

Until we meet again...

My Top 10 favorite websites to save or make money!

I remember vividly back to my high school days, which frighteningly ended 16 years ago, and being given instructions on how to properly use the library card catalog.  A big cube with seemingly hundreds of drawers and millions of tiny cards.  Micro-fiche, phonebooks, the telephone "info-line", 2 inch thick Sears and JC Penney catalogs (and Witmark for you Michiganders), VHS and Beta tapes, and cassettes - all just 15-20 years ago.  The advances in technology have made many things more efficient, and many things obsolete.  For someone trying to be fiscally wise, the advances in technology leave us with much greater tools to be certain we are always getting the best deal.


My most recent example of this comes from an experience I had this week.  Jill and I are in the process of upgrading from a Queen bed to a King.  Four kids have made this a must.  We have purchased everything necessary for a King bed (sheets, comforter, quilt, pillows, etc.) except the actual mattress.  While researching bed skirts (I don't what purpose these serve, or why they are necessary) Jill found just the one she wanted from Target.  The price in the store is $54.99.  She decided to check Target's website, and it happened that the very same bed skirt online was being clearanced for $16.99 with free shipping.  That's a deal!


I am going to need your help to make this post most worthwhile.  I want to layout some of the best websites I've found for us fiscally conscience folks.  But, most importantly, I'd love for you to share any great sites you've come across for the benefit of everyone else reading this.  I'm going to group these into a few categories with a very brief description of the site.  I will check most of these sites every day to keep current on any good deals available.


Sites to MAKE MONEY


- www.fieldagent.net - search for "jobs" in your area and make some quick dough.  I made $2.20 completing a 5 minute Best Buy survey the other day.  They Paypal the money to me and that's it.  Most jobs have you take pictures of specific displays in certain stores and send them in.  Site is still in its infancy, so there are time when no jobs are available.


- www.craigslist.org - Sell, sell, sell your stuff for free.  It's easy to do and possible to make good money in a very short time period.  We made $113 in 18 hours this last weekend.


Sites to SAVE MONEY


- www.groupon.com and www.livingsocial.com - are the two most popular "deal-a-day" sites.  You can many times find very good deals, BUT, only buy things you would normally buy anyway.  For example, paying $150 for $300 worth of teeth whitening is only a good deal if you were already planning on seeking out that service. 


- www.woot.com - They sell one item every day, often at a deep discount.  It tends to be mostly electronic items, but you never know what you'll find.  I made several purchases from this site.


- www.craigslist.org - yes, again.  This can be a great place to get great deals on things.  I've purchased anything from boats and cars to small items like saw blades and hand tools.  I always prefer to buy from individuals rather than dealers or companies as I can often get the price down much more aggressively.


- www.gasbuddy.com - This is a must.  You can always be assured you're getting the lowest price on gas no matter where you happen to be.  Their mobile app is great (and free). 


- www.thedealmap.com - Great site to quickly find great local deals anywhere in the US.  Restaurant deals, discounts on goods and services, etc.


- www.savingaddiction.com - Granted, this tends to be more West Michigan focused, but it serves not only as a local resource for great specials, it serves as a great resource for ways to find and locate good deals.


- www.thriftydecorchick.blogspot.com - Provides great and inexpensive ways to decorate your home (Jill loves this site)


Sites to help with BUDGETING

- www.mint.com - There are lots of budgeting sites, but many charge a fee and aren't easy to use or very comprehensive.  I'm just starting to tinker with this site, so I can't give a full review, but I've found it helpful so far and it gets very good reviews - plus it's completely free!

My list is by no means exhaustive, but it's a start.  Now it's your turn.  What sites have you found helpful?  What sites can you not live without?  Please leave your comments below, or better yet, leave them at The Low Down Facebook page so everyone can view them more easily.  I'm looking forward to learning from you! 

Until we meet again...

The party is over. Now, let's have some fun!

Hello again!  Here we are several days into the new year and our 2011 resolutions.  We've been members of the local YMCA for over 3 years and we are often amused at the dynamics of the new members around January 1st.  Like most gyms or athletic clubs after January 1st, the YMCA is filled to the gills.  New faces, determined looks, fancy new workout clothes, etc.  It takes about 7 days for the crowds to get back to normal and see many of the new faces for the last time.  


I can't help but think about how many of those same dynamics hold true for our financial resolutions.  It's relatively easy to think about what's possible and how the new you will tackle the tallest financial mountains in the coming year.  It is very common to see people well into their 40's before they really begin to think seriously about reaching their lifelong financial goals. Like most well-intentioned New Year fitness goals, many financial goals are left dramatically unmet and largely forgotten about as soon as the first unexpected bill or repair comes along.  


Some people are determined to start living on a budget.  However, if you've ever tried to put a budget together and actually maintain it month to month, it's extremely difficult.  If you've been able to successfully create and live on a budget, please share your experience.  I'm all for it, but I've never really attempted to live on a budget.  That may surprise some of you, but it's true.  It may be especially surprising to know that my income (and we are a 1 income house) can vary as much as 30% year to year.  I tend to take a different approach to budgeting.  Some of my approach will be revealed later on.


If you've already established some goals for this year, good for you, but keep reading.  If you haven't, you are certainly not too late.  I have some tips and ideas for your consideration as you put together your financial plan for 2011.  They go something like this:


1) If you budget for anything, budget for this.  Frankly, there is nothing more irritating than the doorbell ringing as we are sitting down for dinner to find someone asking for donations for the football boosters, or clean water funds, or hungry African children, or a 4th grader selling magazines for a field trip.  Not that these are unworthy causes, but it puts you in an awkward situation that requires split second financial reasoning.  I'm a big believer in giving and giving generously, but also giving strategically.  We will set a general amount aside each year that is for exactly these type of situations.  Once the money is gone, it's gone.  It helps us stay disciplined so we don't end up with 4 magazine subscriptions we don't read.  It also makes saying 'no' that much easier.  I would encourage you to set a specific amount aside just for these purpose.


2) Set a record - then break it!  This one is fun.  One way to feel successful in goal setting is to make them manageable.  Annual goals are okay, but they can seem far off and if you fall behind, they can seem impossible.  Try setting many small goals.  One of my favorites is seeing how many days in a row you (or your family) can go with out spending any money.  This excludes your regular bills and food staples of course.  How many days can you go without any discretionary spending?  No fast food, movies, clothes, coffee, etc.  See how long you can go.  Once you've established your record, then set a goal to break that record!  It can turn into a lot of fun and save you from spending on generally unnecessary items.  Give it a try!


3) Getting a tax refund?  Many of us will be getting a tax refund in the next few months.  Many people use that refund to pay off Christmas bills or credit card debt.  If you have credit card debt that you can't pay off with your regular income, then that is probably the best way to spend that refund.  If you are looking forward to getting a refund to use as you wish, this is an important moment for you.  The temptation will be to spend it on something.  Challenge yourself to fight that urge.  For some of you, this might be your best chance to make a significant contribution to your savings account.  Save it, it'll feel good!


4) If you didn't earn it, save it!  One of my favorite ways to save money is to save every dollar I didn't earn.  The $50 birthday check, the rebate check in the mail, the $20 your neighbored paid you back, the refund given in cash from an item returned to the store, garage sale proceeds, money from Craigslist/Ebay sales, etc.  This is all money you didn't earn, but rather money given to you.  This money, for me, always goes into savings.  You will be surprised how much this might add up to be.  


These ideas are simple and easy.  None of them require detailed budgeting or ongoing maintenance that so often causes us to stumble.  What things do you do?  What goals do you set?  How to you keep yourself accountable?  I'd love to hear from you!


Lastly, there are two ways to connect with the Low Down.  You can follow this blog (see above right) and you can "Like" my Low Down Facebook page.  


Here's to a great 2011!


Until we meet again...

Maybe I should host a rally at the National Mall...

Okay, not really, but I do get fired up about this stuff, and the New Year is upon us.  What a great time to get educated and make some changes!

Merry Christmas and Happy New Year! 

Wow, what a busy time of year.  I hope you were able to find the joy in the season amongst all the stresses.  If you've been following along in this blog the last few weeks, you know I'm wrapping up a three part series around debt management.  I will also admit that writing this is new to me and I'm learning on the fly.  A couple of things have become apparent to me.  First, I had intended on providing commentary around student loans in my last post.  I forgot.  I will include those thoughts in this post.  Second, it's clear to me I did not spend adequate time around mortgage debt management.  There are many other aspects of managing your mortgage that I just couldn't fit in the last post.  I will definitely come back to mortgages, likely many times, in the weeks ahead. 

Now, down to business.  I want to dive into "other" loans which can include personal loans and any sort of title based loan (car, ATV, snowmobile, RV, camper, etc.).  I want to be clear up front about something very important.  I don't advocate taking out any of these types of loans.  I think they should be avoided at all costs.  BUT, I recognize lots of you have them in some form or fashion so we might as well deal with your reality rather than my ideals!  So, my thoughts below will be based on the best way to manage those debts but are not meant to condone their use.

These "other" loans have many disadvantages.  They tend to have higher rates than mortgage debt, the interest is not tax deductible, and in the case of title based loans, you are paying interest on an asset that is constantly going down in value.  A $30,000 car with a 5 year loan at 5%, you'll have paid about $34,000 and have a car that worth about $15,000 after that 5 years.  On a positive note, they allow affordable payments with limited cash out of pocket.

So, what's the best way to manage your car loan debt?  In my opinion, if you have a car loan, or car loans, my encouragement is to pay them off as soon as possible.  Review the first several posts to my blog to find some practical ways to raise thousands of dollars that can be applied to your car loans.  Review every expense to see what can be trimmed down, cut back or eliminated. 

If that's not enough, sell your car and replace it with something cheaper.  Think I'm nuts?  Consider this: Used car values have been INCREASING for the last year.  Your car may be worth more than you think.  I sold a car this year for 30% more than I bought it for 2 years prior.  It's not likely this trend will continue for too much longer.  This may be the best time to sell a used car. I always prefer private car sales over trading in to a dealer.  It's not hard, it's free, and can bring much better prices than trading your car in.  Craigslist is a great place to sell your car.  If your uneasy or unsure, contact me and I'd be happy to help walk you through the process.

If you are considering buying a used car soon, do your very best to do so without taking on debt.  It might mean driving a junker.  Who cares?  It's worth it.  By the way, I will be dedicating an entire post sometime in the future of the economics of buying a new vs. used car.  You might be surprised at what I've found.


Student loans, on the other hand, have some inherent benefits.  Not only did those loans help provide you a higher education, thus hopefully higher paying work, the interest is also deductible (within certain limits).  I still advocate paying them off as soon as possible, but allocate extra cash to your debt that doesn't have deductible interest (credit cards, car loans, etc.) Here's how I would rank debt in terms of pay down importance:

1) Credit Cards / Personal Loans
2) Title-based loans (Car, snowmobile, RV, etc.)
3) Student Loans
4) Mortgage Loans

Managing your debt wisely can pay huge dividends for your future.  I can't stress enough how important it is to educate yourself in this area.  It starts with learning to live within your means.  It's shown that people will adjust their expenditures in close correlation to their income.  If ones income increases by 5%, so likely will their expenses.  Remember back to a time where you had very little.  Maybe that was during your early working career, or maybe that's right now.  Is/was your quality of life different during that time?  A great saying I often reflect on is, "The more you know, the less you need."  I often meet individuals that have lived lives of financial ignorance until they are ready to retire and those are the most difficult conversations to have.  

Do something about it.  Challenge yourself to become more financially fit in 2011!

Until we meet again...

Forget White or Blue. How About a Green Christmas?

Hello again!  For those who may have missed the inaugural post to this blog, one of the primary reasons I’m taking the time to write about various finance related topics is because people ask me financial questions all the time (which I love, by the way) so it occurred to me it may be beneficial if I start typing out responses to the questions I get most, or the areas I see people struggle in most.

I mention this because there may be some topics I cover that you find less interesting or you’re already quite knowledgeable in.  Either way, please consider forwarding this blog to other friends or family as there is a good chance there may be some resources they may benefit from.  The web address to send them (or to bookmark for yourself) is www.thelowdownreport.blogspot.com.  Please also consider “following” my blog.  I still don’t know what that means, but I suspect it means you’ll be aware of new posts as I put them up??  Also, the first person to read this post will be my 300th visitor!  

Alright, now back to business.  Part 2 of The Great Debt Debate will focus on what is called (excuse the jargon) deductible debt.  This means, for a majority of us, the interest we pay on this debt is deductible when we file our yearly taxes.  In short, if you qualify for the deduction you’ll receive back about $0.15 for every $1 you pay in interest.  Not a bad deal!  Deductible debt consists primarily of mortgage loans on your primary or secondary home, government sponsored student loans, and home equity lines of credit (HELOC).

My goal here is not to tell you how mortgages work, or where best to get a mortgage, or even how much of a mortgage you should consider taking (relative to your income, etc., which I will likely cover another time), but instead to focus on how best to manage the largest debt you’ll probably ever have, some pitfalls to watch for, and to challenge some conventional wisdom by suggesting that it rarely ever makes sense to have a 30 yr fixed mortgage.  I’ll also look at student loans and some best practices in managing them.

One thing everyone can agree on is that lower mortgage rates are better than higher mortgage rates.  For some, lower rates allow them to buy a bigger home than they would normally consider.  For others, lower rates simply mean they will have extra cash to put into savings each month.  Guess which view I take?  Lower rates mean lower monthly payments.  BUT, there are some other important things to consider when financing, or re-financing, your home. 

Interest-Only vs. Principal and Interest

The decision to pay down principal on your home is an important decision.  Should you pay principal?  Well, it depends.  Part of the decision is whether or not you are a disciplined saver.  Having an interest-only mortgage ONLY makes sense if you save the principal you would other wise be paying to the mortgage company.  Interest-only mortgages should not be used just to buy a bigger house.  This can be very dangerous.  I have paid $0 toward the principal of our home(s) in the last 10 years.  If you’re like most, your house value has decreased in the last few years.  By paying down principal, you are putting money into an investment that is decreasing in value.  Your $100 principal payment two years ago may only be worth $80 now.  By only paying the interest and putting the would-be principal payment into a savings account, your $100 savings deposit two years ago would be worth around $104 today.  This can be a big difference over time. 

Even in a more “normal” environment where home prices are increasing, there is still a tremendous benefit to only paying the interest.  Being disciplined by saving your would-be principal payment can mean thousands of dollars built up in a savings account over time.  If you ever move, and as you’ll read in a bit, you will several times in your life, you will have that extra cash in your hand ready for a down payment instead of locked up in your home and unusable until your home sells. 

I cannot stress enough – doing this requires discipline.  It would be VERY easy to just spend the money you should put into savings.  This will be a challenge for most.

The 30 Year Mortgage Myth

It’s what your parents did.  It’s what your friends do.  It’s the rate most quoted in ads, commercials, by banks, etc.  It might be one of the worst financial decisions you can make.  The 30 year fixed rate mortgage is the most widely used product in the lending community, therefore, it’s the most widely held mortgage among consumers.  On some levels, it makes sense.  It’s the easiest to understand, it provides an affordable payment, and it’s nice knowing that after 30 years of payments your house is paid off.  The reality is much different. 

The studies I’ve read, many by the Federal Reserve, suggest that the average person moves to a different home every 6-8 years.  There are very few people who stay in the same home for 30 years or more.  I, for example, have lived in 5 different homes in the last 10 years.  It would make more sense, then, to look at financing your home closer to the amount of time you’re likely to live in it.  The reasons are many.  The average 30 year mortgage rate today is around 5.10% (check local listings).  The average 5/1 ARM rate is 3.15%.  (What’s a 5/1 ARM you say?  It’s simply a 30 year loan, amortized over 30 years, that offers a fixed rate for the first 5 years.  After 5 years it becomes a variable rate.)

The savings are significant.  On a $200,000 home, you’ll pay about $4,000 less in interest each year (or $333 per month).  That’s $20,000 less interest over the 5 year period.  More importantly, that can be $20,000 in your savings account.  Plus, if you’re average, you may not live in your home more than 5 years.  There are also 7/1 ARMs available. 

The savings are so significant that Alan Greenspan, the prior Fed president, commissioned a study to research whether 30 year mortgages should be discontinued because they can be so financially disadvantageous to consumers.  My research also shows that interest rates tend to run in 5-7 year cycles, so if you found yourself staying in your home longer than 5-7 years, you’ll likely have a good opportunity to re-finance before your 5/1 ARM would change to a variable rate. 

This won’t be the best choice for everyone.  Like most financial things, one size does not fit all.  Some may still benefit from a traditional 30 year mortgage, but if you spend the time and do that math in context of what your future living plans might be, you may be surprised at what you find.  There are other considerations to make that I won’t discuss here (future income potential, credit scores, age, etc.)

Wow, I feel like there is a lot I didn’t cover, but this post is getting lengthy.  What are your thoughts?  I know I have a couple of Loan Officers who read this blog.  Am I crazy?  Disagree with me?  Please share.  I’ve got a lot of material and spreadsheets to help analyze the best way to manage your mortgage, so if you have questions, please feel free to ask me privately or publicly.  These are just my thoughts and opinions, so take them as such!  Next time.....CAR LOANS.

Until we meet again…

The Great Debt Debate: Part 1 of 3

Welcome back!  I have to say, I've been very encouraged by all the positive feedback I've received after my first few posts.  This has been fun for me (so far!) and I've learned a lot from your thoughts and comments as well.  To this point, I've been sharing ideas that revolve mainly around ways to save money, or reduce complications or stresses in your life.  I'm taking a diversion from that for the next few weeks and will try to dive into a topic very near and dear to my heart.

There are many great things we learn through our primary and secondary education years.  We learn reading, writing, math, music, art, science, history, literature, etc.  However, the most crucial oversight within our education system, in my opinion, is the lack of education around how to handle money.  I recall a class in high school that taught me how to write a check correctly but gave no education on how to best manage the money in that checking account.  Even further, there is ZERO education on how to manage debt.  It should come as no surprise that the average citizen handles debt very poorly.  Without access to good information, isn't that the outcome we should expect? 

To make matters worse, even after our critical education years, we are left with almost no resources.  You can hire an insurance agent to help manage your insurance policies, a financial advisor to help manage your assets, a CPA to help with your taxes, or an attorney for help in legal matters, but there is no one you can hire to help manage your debt.  It should be noted that the 800-number credit help agencies are NOT there to help you manage debt.  They exist to make money, many times at your expense.  It should also be noted that mortgage loan officers are not debt managers either.  They can be very helpful in obtaining good loan terms, but that's where it ends.

So, making educated and calculated decisions about your debt is entirely up to you.  For some it will come more naturally.  For most, it requires education, budgeting, knowledge of credit products, etc.  You can't afford to simply be ignorant.  Good luck!!

I will break this topic down into a 3 part series (maybe more).  I will start with credit card debt.  Part 2 will be deductible debt (mortgages, student loans, HELOCs), and part 3 will be all other debt.

Credit Cards

Credit cards, if used properly, can be very powerful financial tools.  If not used properly, they can cause great financial harm.  I will have a future post dedicated solely to my research on the best credit cards available, but for now, I'll focus on some caveats to be aware of when considering whether to use them or not. 

There is one basic and simple rule with credit cards.  If you pay your balance in full each month, get rewarded for it, and if you carry a balance, make sure you DO NOT have a rewards card.  Typically, if a credit card offers 1% cash back, the interest rate is 1% higher than a card that offers no cash back.  However, if you pay off your balance each month, make sure you're rewarded for it (I'll explore the best reward cards another time).  Rewards aren't as generous now as they were a few years ago, but I can still typically get between 1-3% cash back.

Cash back is always my preference.  I can get a check every month and put it right into my savings account.  Airline miles tend to accumulate and be forgotten about, plus the rules can change any time on those miles.  Lastly, you might spend 25,000 miles on a $150 airline ticket.  Earning $150 in cash back would only take 15,000 points.  Which makes more sense?

Rewards are great, but I specifically want to focus on those who carry a balance each month.  While I can't offer specific advice that would cover every variable, I hope I can offer some ideas to encourage you to be disciplined to get your balance paid off.  Credit card debt is what I consider "bad debt" because the interest rates are very high, the interest is not tax deductible, and the minimum payments required can leave you paying on the debt for years and years.

In most cases, people carry a balance simply because they don't have the funds available to pay it off.  This leaves you with two options: 1) Make more money or 2) reduce your spending to free up cash.  While there are things you can do to make more money, realistically, those opportunities may be limited.  Therefore, option two will offer the most flexibility.  There are many options for reducing spending to free up extra cash to apply to your credit card balance.  Look to my last post to find a way to generate a few thousand dollars every year to apply to your debt.  Many times it comes down to making tough choices in order to make significant headway toward your goal.  TV, newspapers, internet access, magazine subscriptions, gym memberships, eating out, cell phones, etc., are all luxuries that can be reviewed for their necessity.  I won't make many friends with that viewpoint, but you must be willing to make those tough choices.

Try this exercise: Inevitably, you've been in a store and noticed a pair of jeans, or a new tool that you would love to have, but was not the reason you were in that store.  Those jeans give you the butt you've always wanted, and they are on sale!  Mentally, you can already picture them hanging in your closet.  You've mentally committed to buying those jeans.  STOP!  You've decided you're going to part ways with $50 from your bank account.  Make the tough choice, put the jeans back, drive straight home and make a $50 payment towards your credit card.  You'll be glad you did.  Plus, let's be honest - you really don't NEED those jeans, do you?

Ultimately, if you carry a balance on your credit card(s), you must become disciplined both on the things you choose to buy and on how you pay it back.  It's not my opinion that all credit cards should be destroyed and you should deal in cash only, as credit cards can be a very powerful tool.  But if you're a crediholic, you have to face the reality of your situation and choose to do something about it. 


I've had clients who play the credit card game.  They will continually transfer a balance to new cards every few months to take advantage of 0% offers as a way to avoid interest charges.  The two reasons someone might do this are 1) they are leveraging the money as best possible but have the resources to pay off that balance anytime they choose, or 2) they transfer the balances out of necessity because they can't afford to pay it off.  I'm not particularly a fan of either option.  Balance transfers usually have a transfer fee attached to it and many times they essentially prevent you from using the card for anything else.  For example, if you transfer a $1,000 balance to card "A" at 0% interest and then use that card for your everyday purchases, many times any payments toward that card will be applied to the balance with the lowest rate (your $1,000 balance transfer) and none of your payments will get applied to your purchases until your $1,000 balance transfer is paid in full.  You'll be accruing interest on those purchases.  That's a rotten deal for you - don't do it.  


Playing this game can also negatively affect your credit score - sometimes substantially.  I had a client who made $43,000 per month but couldn't get a mortgage because their credit score had dipped so low as a result of playing this credit card game.


I am a believer in the debt snowball method.  This method essentially has you pay off your smallest debt first, and once paid off, add the payment you had been making on that debt to the payment you're already making on your next biggest debt.  This makes a lot of sense because it's encouraging when you actually pay off a debt and then see your other balances be reduced more quickly.  Plus, it doesn't require you to make more money or cut your spending.  


There are so many more avenues that I could discuss here, but I think I'll reserve that for another time.  If you have a specific situation that you'd like to discuss with me privately, I'd be happy to do so.  For some of you, this will not be easy, and it can seem hopeless.  Do not give up.  Life is full of choices and sometimes the most rewarding moments are the result of very difficult decisions. 


A great documentary to watch is called Maxed Out.  I own both the book and DVD and would be happy to lend out either to anyone interested.  The DVD is commonly found in many videos stores in the documentary section.  It's also available on Netflix.  It doesn't really explore ways to solve personal credit card issues, but it does shine a light on the credit card industry and highlights things to watch out for.  


http://www.amazon.com/Maxed-Out-Hard-Times-Credit/dp/B001PO64WI/ref=sr_1_3?ie=UTF8&qid=1292039177&sr=8-3

What advice can you share with others?  Had a good/bad experience?  Success story?  Please share your comments! 

My next post will focus on mortgage debt.  Think a standard 30 year mortgage is always the way to go?  Think again. 


Until we meet again...

$2,011 in 2011

I’ve found it hard to get into the Christmas spirit this year.  I attribute that mostly to the weather.  Apparently all it took was a nice blanket of snow the other day to turn me into a Jingle Bells singing fool.  It’s usually this time of year that people begin to think about what next year will bring.  Now that your Christmas will be less stressful – thanks to my last post – it’s a great time to get your affairs in order before 2011 is here.

I will admit upfront that many ideas I’ll share below could be quite challenging to you.  Some of you might think I’m nuts.  I can attest, however, that I’ve done all of these things, they all work, and they are absolutely worthy of your consideration.

But first, let’s cover some more practical, mainstream matters first.  Here’s a short list of a few practical end-of-year matters you need to take care of or at least consider:

1)    Fund your retirement plan.  I can’t stress enough how important this is.  Fund it until it hurts, and then fund it some more.  I’ve had several of you ask me about college planning/funding for kids or grandkids.  I will cover this more in-depth soon, but for now, your retirement account should always be fully funded for the year before you consider putting a dime toward your kids college education.  If you don’t have a retirement plan (IRA, 401K, 403b, etc.) start one.  Now.  It’s never too late.

2)    Give and give generously.  Church, food pantries, agencies, non-profits, foundations, scholarship funds, fundraisers, etc.  Clothes, food, money, whatever.  Most of these are tax deductible.  Whenever possible, write a check (for tax purposes).  If you have to give cash, ask for a receipt.

3)    If you have any Realized gains from any investments (you sold your investment at a higher price than you paid means you’ve realized that gain) take a look at what they are and, if necessary, consider selling any investments in which you have a loss to offset some or all of those gains.  This can minimize your tax obligation.

Okay, enough of that boring (but important) stuff.  Want to have some fun?  Let’s get into some ideas or challenges for you to consider as we get ready for 2011.  These are great ideas for saving some extra money, and at the same time even teach some good life lessons for yourself and any kids you might have.

I’ve done all of these things at some point.  They can be very fun, are quite practical, and make a lot of sense.  I challenge you to stretch yourself, and by doing so, it will stretch your dollars.  If you try any of these, please let me know how it went.

1)    No Food For You!  This one makes a lot of sense, especially on the heels of Thanksgiving.  The challenge is this: Take a week off from buying groceries and only use food that exists in the back of your fridge and pantry.  You’ll be surprised how easy this is.  With four kids, our weekly grocery bill is around $150.  Once to twice per year well skip buying our weekly groceries and get creative with the box of pasta that’s been in our pantry for 6 months and the muffin mix we had great intentions for last spring.  Not only does this save money, but it clears out your overstocked pantry!  BUT, here’s the most important part – put your savings in a savings account.  If I don’t take $150 and put it away, it’ll just be spent somewhere else.  Have fun with this, get creative, and share your adventures should you choose this challenge!

2)    You mean I have to talk to my spouse?  This challenge will be the most controversial, but I promise you it will be the best decision you can make.  The challenge is this: Get rid of your TV for one year.  That’s right, I said it.  Get rid of it.  Full disclosure – we have 2 TVs in our home currently.  That said, we’ve lived without TV for several years, and we miss those times dearly.  I cannot quantify for you the amount of life you waste watching TV.  You really have no idea – until you get rid of it.  You’ll rediscover your spouse, your kids, your neighbors, books, hobbies, family, etc.  It’s amazing the difference it will make in your life.  Another bonus?  No cable bills!  Here’s the important part – take the money you had been using to pay your cable bill and put it into a savings account.  In one year this can easily top $1,000 in savings.

3)    AND you want me to shop with my spouse?  This was one of the first challenges Jill and I took when we were first married.  To save our pennies, we wanted to spend as little as possible on food.  The challenge is this: Once a month, cut your grocery budget in half for the week and make it work.  Here’s the key: Prior to hitting the store, visit an ATM and take out CASH ($75 in our case) and leave your credit cards at home.  Take the whole family and make it an event.  Get creative, don’t succumb to buying junk food, and spend time planning it out before you go.  Your kids will learn the value of a dollar, and you will be forced to shop for the best deals and make the most with your money.  It’s rewarding to know that everything in your cart was purchased for a specific purpose.  Again, take the other ½ of your grocery budget you didn’t spend and put it into a savings account.

What happens if you take these challenges and implement each of them in 2011?  You will have a savings account with about $2,000 in it!  Wouldn’t that be nice?  Who’s going to take the challenge?  Report back how it goes, how much you’ve saved, and what you’ve learned.  I’d love to know!

Until we meet again...